Labor woes hinder retailers' goal of challenging Amazon

An employee hands a customer a receipt after making a purchase at a Target Corp. store on Black Friday in Dallas on Nov. 24, 2017. MUST CREDIT: Bloomberg photo by Laura Buckman.

An employee hands a customer a receipt after making a purchase at a Target Corp. store on Black Friday in Dallas on Nov. 24, 2017. MUST CREDIT: Bloomberg photo by Laura Buckman.

Photo: Laura Buckman

Labor woes hinder retailers' goal of challenging Amazon

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Brick-and-mortar retailers hoping to fend off Amazon need to deploy the one weapon that could set them apart: top-notch customer service, provided by actual humans.

But making that goal a reality relies on something they've not really invested in - well-trained employees with the kinds of wages and regular hours that make them want to stick around.

This illustrates traditional retailers' dilemma. In the face of existential threats such as e-commerce and declining mall traffic, more generous pay might improve service. But it comes at the risk of spooking skeptical investors, who are already closely monitoring costs and margins.

"It's obviously a delicate tightrope, where retailers that are watching their profit squeezed need to figure out where to cut," said Simeon Siegel, an analyst at Instinet. "Looking at the people who drive that business as an asset instead of a liability is difficult."

As they boost payrolls during the crucial holiday shopping season, chains are mostly sticking to low-wage and part-time positions.

With unemployment at a 17-year low and a broader shortage of workers, it's a tough time to change the long-established model.

While some major players, including Walmart and Target, have announced plans to increase pay, low wages persist. Workers say they can't get the flexible hours they want, and hiring part-timers remains a common way out to avoid spending more on benefits and perks.

"Retail is usually seen as being low on the food chain, so you're not going to see much pressure, even during the holidays," said Scott Brown, chief economist at Raymond James Financial.

The median U.S. retail sales employee salary was only $22,900 in 2016, according to figures from the Labor Department.